Settlement agreements and TUPE

The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) operate to protect employees on the transfer of a business or when a service contract changes the contracted provider. TUPE often causes confusion for a number of reasons, the main often being which employees transfer. It is imperative that employers get this right and as zero hour contracts are now commonplace, whether those working under them transfer is a burning issue. The first step in addressing this question is whether casual workers and those under zero hour contracts are employees.

Regulation 2(1) of TUPE defines employees as “any individual who works for another person, whether under a contract of service or apprenticeship or otherwise...” Employees or workers retained under zero hour contracts could therefore be considered to be ‘employees’. Whether they transfer however depends on the circumstances of their ‘employment’ in relation to the transfer.

Under TUPE, employees who transfer are those who;

are employed by the Transferor and assigned to the organised grouping of resources or employees to which the transfer is subject; and

Are employed immediately before the transfer.

Analysis of the casual workers’ roles should be undertaken. Whether they are part of the organised grouping of resources or employees will be one of fact, depending on the circumstances. A number of factors must be considered, for example, if part of a business is being transferred it will be necessary to determine the amount of time that the employee spends working in that part of the business – generally, the higher the percentage, the more likely it is they will be assigned to the part of the business that is transferring. An employee must actually be employed or deemed to be employed at the moment of the transfer in order to be subject to the automatic transfer principle.

This is especially prevalent with casual workers and can be determined by whether the contract preserves continuity between assignments or not. It is also a question of fact depending on the frequency, length and importance of the employee’s role. Therefore, for the purpose of TUPE, casual workers and those on zero hour contracts are employees although whether they transfer will depend on the factual circumstances prevailing immediately before the transfer.

All employees should consider their options when offered a settlement agreement in or around the time of a transfer between employers. This is regardless of the type of contract that may have been issued by the original employer.

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